Focus on the easing and improvement of the property market
Editor's note: On May 17, the property market ushered in a blockbuster benefit, and multiple departments joined forces to play a policy "combination punch", and further efforts were made to ensure the delivery of housing and destocking. In addition, with the recent lifting of purchase restrictions in Hangzhou, Xi'an and other cities, second-tier cities have basically loosened, and first-tier cities have also been relatively relaxed. This issue of Real Estate Weekly focuses on the easing and improvement of the property market, focusing on the positive changes in the real estate market in first- and second-tier cities.
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■China Economic Times reporter Zhou Xuesong
On May 17, many departments once again played a "combination punch" of property market policies, and the central bank brought heavy favorable policies, ensuring the delivery of housing and destocking. In particular, the central bank has comprehensively reduced the down payment and mortgage interest rate for house purchases, canceled the lower limit of the interest rate on commercial loans for the first and second houses at the national level, and lowered the interest rate on housing provident fund loans.
The frequent introduction of favorable policies has given confidence to the industry. Some industry experts told the China Economic Times reporter that the property market has now bottomed out and a rebound is expected. However, some experts believe that the property market is still in the process of adjustment, and more vigorous reform measures need to be introduced to achieve stable recovery.
01
The new deal is expected to have a greater impact on market sentiment
According to the new policy, the minimum down payment ratio for the first home is adjusted to not less than 15%, and the down payment ratio for the second home is adjusted to no less than 25%. Commercial banks' mortgage lending rates and provident fund lending rates hit record lows. Coupled with the coordinated efforts to ensure the delivery of housing and destocking, real estate stocks ushered in a collective rebound on May 17, with more than 20 stocks rising to the limit, and the confidence of the capital market has also had a positive impact on the property market.
Although some industry insiders believe that the property market has not yet completed the bottoming, Li Wenjie, senior vice president of Shell and president of Shell Research Institute, told the China Economic Times that the property market has bottomed out and stabilized, but it will take time to recover.
For the future trend of the real estate market, Chen Gui, executive vice president of the Beijing Real Estate Society and founder of the wharf think tank, is also relatively optimistic, he said in an interview with a reporter from the China Economic Times that the turning point of the property market should be almost coming.
"The real estate market has been in a downward trend for more than three years, and we see that policies are coming out frequently at this point in time, which means that if the market continues to shrink in volume and price, then the policy will continue to increase. Subjectively and objectively, it is now the bottom. Li Wenjie told reporters.
However, he further pointed out that consumers are still waiting and seeing, and the price indicators in the market, whether it is new or second-hand, are out of order. There is a record price for new houses, and there is a guide price for second-hand houses. The real estate market should restore the market's original price signals, so that consumers and regulators can truly understand the market's movements.
"Only in this way can the debt be cleared, the expectations of consumers can be fundamentally changed, and the market can really bottom out. Otherwise, consumers still have a wait-and-see mood, feeling that there may be room for prices to fall again. Actually, I don't think so. Li Wenjie added.
Although the first-tier cities have recently relaxed the restrictions on the purchase of the property market, the relevant person in charge of a leading real estate company said in an interview with a reporter from the China Economic Times that from the perspective of policy effects, "the waves are not shocked". The relevant person in charge of Poly Real Estate also told the China Economic Times reporter that the company's project sales are okay now, but from the overall market point of view, the trend of recovery is not obvious.
In Chen Gui's view, the current policy needs to be further strengthened, to strike while the iron is hot, the policy must be issued as soon as possible, the real estate expectations in first-tier cities are fundamentally reversed, and buyers will make up their minds to enter the market.
On May 17, the People's Bank of China (PBOC) and the State Administration of Financial Supervision and Administration (SAMR) issued three notices on housing loans, adjusting loan interest rates and down payment ratios. The down payment ratio for the first home is reduced to no less than 15%, and the down payment ratio for the second home is not less than 25%. At the same time, the lower limit of the interest rate policy for the first and second home loans at the national level will be cancelled, and the interest rate on personal housing provident fund loans will be lowered by 0.25 percentage points.
Chen Wenjing, director of market research at the China Index Research Institute, told the China Economic Times that the adjustment of the down payment ratio and mortgage interest rate by the central bank and the State Administration of Financial Supervision and Administration is an important deployment to implement the spirit of the Political Bureau meeting of the CPC Central Committee on April 30, and is to adapt to the new changes in the supply and demand relationship of the mainland real estate market, the new expectations of the people for high-quality housing, and the specific measures to promote the steady and healthy development of the real estate market, reflecting the determination of the regulatory authorities to stabilize the real estate market.
After the policy adjustment, the down payment ratio and mortgage interest rate are at a historical low, further reducing the down payment threshold and the cost of buying a house for residents, which is expected to boost residents' willingness to buy a house.
"I think that now buyers in first-tier cities don't have to wait, because there is very little speculative demand for investment now, the rent-to-sale ratio is relatively low, and the demand of buyers in first-tier cities is basically rigid and improved, so I think there is no problem to buy a house now, and the time to buy a house is now. It's just that the plate differentiation in first-tier cities is more obvious, and it is necessary to consider which plate is better to choose. Li Wenjie told reporters.
02
The Shanghai and Shenzhen property markets are the first to rebound
Ding Zuyu, chairman of CRIC Group, said in an interview with a reporter from the China Economic Times that since 2024, the overall property market has continued to bottom out, and the supply has continued to shrink. However, second-hand houses are more cost-effective due to the price reduction of owners and the increase in the number of listings, which is more attractive to rigid demand, thus diverting new tenants.
Ding Zuyu said that at present, the second-hand housing market transactions are stronger than the new housing market, and the proportion of second-hand housing transactions in cities such as Beijing and Xiamen has jumped to about 70%, which is significantly higher than that in 2023. In the short term, the recovery of housing demand in the market also needs to deal with problems such as weak expectations of rising housing prices, lack of income confidence, and high leverage ratios.
"Under the favorable policies, market confidence and expectations are expected to gradually recover, driving sales to pick up, and market transactions may increase slightly in the short term. However, on the whole, under the combined effect of policy superposition and market supply and demand, the property market will continue to repair the trend of bottoming out in the future. Ding Zuyu said.
According to data from the National Bureau of Statistics, from January to April, the sales area of newly built commercial housing in 70 large and medium-sized cities was 292.52 million square meters, a year-on-year decrease of 20.2%, of which the sales area of residential buildings decreased by 23.8%. The sales of newly built commercial buildings were 2,806.7 billion yuan, down by 28.3 percent, of which the sales of residential buildings fell by 31.1 percent. At the end of April, the area of commercial housing for sale was 745.53 million square meters, a year-on-year increase of 15.7%. Among them, the area of residential buildings for sale increased by 24.5%. In April, the real estate development prosperity index was 92.02. Overall, the month-on-month and year-on-year declines in the sales prices of commercial residential buildings in all tiers of cities have expanded.
While seeing the pressure on the property market, we should also see that the property market in first-tier cities, especially in Shanghai and Shenzhen, is relatively obvious. According to the monitoring data of Zhuge Data Research Center, in the 19th week of 2024, the transaction volume of newly built commercial residential buildings in the key 15 cities was 14,685 units, an increase of 74.24% month-on-month. Due to the "May Day" holiday in the 18th week, the transaction fell off a cliff, but in the following week, as the impact of the holiday gradually faded, the demand for housing purchases recovered, and the transaction of new houses ushered in a significant upward trend month-on-month. Although the transaction heat of new houses in Beijing has shrunk slightly compared with the "May Day", it cannot be ruled out that the partial relaxation of purchase restrictions is still fermenting, and the transaction volume is slightly higher than that of the 17th week.
In the 19th week, 19,379 second-hand residential units were traded in the key 10 cities, up 184.9% month-on-month and 85.73% year-on-year. With the end of the "May Day" holiday, the second-hand housing transaction has also accelerated the recovery trend, doubling month-on-month, slightly lower than the pre-holiday transaction level. Catalyzed by the partial loosening of the purchase restriction policy, the growth pace of second-hand housing transactions in Shenzhen has stabilized at a steady pace of new houses, and the transaction volume in the 19th week not only rose sharply compared with last week, but also exceeded the pre-holiday level by about 10%.
From the perspective of housing price trends, data from the National Bureau of Statistics showed that the sales prices of commercial housing in all tiers of cities continued to decline in April. The month-on-month and year-on-year declines in selling prices expanded. However, among the first-tier cities, the price of new homes in Shanghai rose by 0.3% month-on-month; On a year-on-year basis, it rose by 4.2%.
Wang Xiaochang, head of the Zhuge Data Research Center, told reporters that from Shenzhen's point of view, the effect of loosening purchase restrictions is slightly better than that of Beijing, and the proportion of housing prices that have risen in price in the past two weeks has risen "two times in a row". Recently, Shenzhen has relaxed the purchase restriction policy in the seven districts, which is also mixed with the impact of the recovery of housing demand after the "May Day" holiday, and the transaction volume of new and second-hand houses has risen, and the performance of second-hand houses is better than that of new houses. In the 19th week, the transaction volume of second-hand residential buildings in Shenzhen increased by 12% compared with the 17th week before the holiday; The proportion of price increases rose to 19.1% in the 18th and 19th weeks, and was 3.4 percentage points higher than the weekly average level of the year.
Yu Xiaoyu, general manager of Yihan Think Tank Research Center, told the China Economic Times reporter that for the property market, the new deal will undoubtedly be positive, by reducing the pressure of residents' down payment and repayment, stimulating residents to buy houses and increasing leverage, boosting residents' willingness to buy houses, and most likely stimulating a wave of demand to enter the market.
Some industry insiders and experts believe that the property market is still in the process of adjustment, and greater reform measures need to be introduced to achieve stable recovery. Li Wenjie pointed out that many unreasonable restrictive measures should be eliminated in the property market transaction. On the demand side, the current policy is relatively strong, which should be enough. On the supply side, the most important thing is the debt risk of real estate companies, which needs a little time to clear.
Chief Producer丨Wang Hui and Che Haigang
Producer丨Li Piguang, Wang Yu, Liu Weimin
Editor-in-Chief丨Mao Jinghui Editor丨Gu Yun